Business investment is weak, but an unfunded company tax cut won’t fix it

The overwhelming reason why companies undertake investment is to exploit market opportunities for the goods and services that the investment supports. Cutting the rate of company tax can lead to a marginal increase in the after-tax rate of return of an investment - but only if the project is profitable in the first place, and that depends on demand and broader economic growth. 

Because of dividend imputation in Australia, the role of company tax in influencing investment decision is even more marginal than in other countries - it is mostly only foreign shareholders that would benefit from a cut in Australia's company tax rate.

Jim Minifie (Grattan Institute) explains the importance of economic growth for investment decisions.

Latest Murray-Darling squabble sheds light on the plan’s flaws

Lin Crase (University of South Australia) explains that federal governments using the plan have found shifting water away from irrigation at least as difficult and costly as it is for the states.

How Australia decides who is a genuine refugee

Mary Anne Kenny (Murdoch University) explains the process of determining refugee status.

What economists and tax experts think of the company tax cut

In a perfectly stylised model of the economy, a company tax rate reduction to 25% could be expected to deliver modest economic gains. But the evidence overwhelmingly rejects such a notion. Jenni Henderson (The Conversation) explains why Australia's leading economists disagree with the Government's economic justifications for a company tax rate cut.